[Good Morning Stock Market] "Comfortable in Wait-and-See Mode VS Need for Stock-Focused Individual Battles"

Photo by Getty Images Bank

[Asia Economy Reporter Kum Boryeong] International oil prices have plunged, dampening investor sentiment. In particular, there is an analysis that it may be more comfortable to remain in a 'wait-and-see mode' for the time being, given that this situation could lead to bankruptcies among U.S. shale gas companies. On the other hand, despite ongoing concerns about a decline in domestic stock prices, there are also opinions that individual battles focusing on specific stocks or sectors are necessary.

◆ Najanghyuk, Hana Financial Investment Researcher = According to the U.S. Department of Labor, considering the expected number of unemployment claims for the third week of April announced on the 23rd (4.5 million claims, Bloomberg), it suggests that about 26.5 million people have lost jobs or experienced significant reductions in working hours over the past five weeks. Taking into account the number of permanently unemployed (177,000) among the 1.5 million unemployed in March, if we simply assume this figure is ten times higher in April, the unemployment rate for April would surge to about 13.7%. This is why the IMF’s warning that the global economy will experience the worst recession since the Great Depression due to the COVID-19-triggered Great Lockdown does not sound unfounded.

The unprecedented plunge in international oil prices is also contributing to the weakening of market participants' sentiment. On the 20th, the price of West Texas Intermediate (WTI) May futures closed negative for the first time in history (minus $37.63 per barrel), and the June WTI delivery price remains in the low $10 range. Especially, this sharp drop in international oil prices could lead to a chain of bankruptcies among U.S. shale gas companies, triggering a credit crunch in the high-yield corporate bond market, which recalls the trauma of the unprecedented financial market panic experienced in March. From an asset allocation perspective, it seems preferable to maintain a wait-and-see mode across the financial markets for the time being.

◆ Jo Byunghyun, Yuanta Securities Researcher = About a month ago, the KOSPI index was in the 1400s and has continued to move around 1900. Amid concerns about the macro situation triggered by the spread of COVID-19, the rebound has continued, leading to clear concerns or expectations about a decline in the index through inverse exchange-traded funds (ETFs). Especially since this rebound is being driven by individuals in terms of supply and demand, doubts about the continuity of supply and demand and uncertainties about a decline seem to be further stimulated.

Although individuals have recently somewhat expanded their use of inverse ETFs, they have increased their concentration on Samsung Electronics, the representative stock of the domestic stock market, during the buying period. If we weight the daily closing price of Samsung Electronics by the net purchase volume of individuals, the average purchase price of individuals is estimated to be around KRW 51,396, while the previous day’s closing price was KRW 49,850. This can be interpreted to mean that individuals who have made large net purchases of Samsung Electronics have little incentive to sell at the current price. Considering sufficient supply and demand capacity and the lack of major selling factors for the representative stock, it seems unlikely that individuals have caused downward pressure on the index.

From the perspective of exports, it is difficult to see the KOSPI level as overheated; no major internal supply and demand participants appear to be aggressively selling the representative stock; and risk indicators seem to be passing their peak. Taking these factors into account, betting on a sharp decline in the index does not seem to be very beneficial at this point. It is judged that it is a more appropriate time to implement investment strategies focused on sectors or individual stocks rather than responding based on the direction of the index.

This content was produced with the assistance of AI translation services.